October 2009

October 30, 2009

Recently, I wrote a piece that contested the notion that the troubles which seem to so frequently follow lottery winners and other recipients of sudden financial windfalls were an absolute consequence of gaining their monies.On the heels of that article comes the news that ex-NBA star Antoine Walker who made over $100 million dollars in just 12 years and who is now still just 33 years old is about $4 million in debt.A closer look at what has brought him to this point reveals another case of nouveau riche gone wild: providing for the care and feeding of an entourage that has numbered as high as 70 people, a mansion for his mother that came complete with 10 bathrooms, numerous trips to casinos, luxury cars, jewelry, et cetera, et cetera.To his credit, it’s understood that he was also generous with underprivileged youth, but either way, he spent it all…and, quite obviously, then some.

As with the lottery winners and others who essentially tripped and fell into a pile of money, the casual observer may decide that money is the problem here.It isn’t.The problem is lack of even the most remote level of common sense.Money is a wonderful resource, and can quite obviously do so much for so many.There are plenty of people who possess a woeful lack of any sense, but because they have limited resources, the damage they can do is itself more limited; armed with sacks full of money, those same people can become weapons of mass (including self) destruction.

Money is a tool.I can take a hammer and build a house; I can also use that same hammer to smash in a car windshield.I can serve as a good steward of the money with which God has blessed me and provide for a meaningful existence for myself and my loved ones…or I can become a train wreck with all the fearsome power of a locomotive.

October 12, 2009

Every so often, one will trip across a news feature that describes the misfortunes that sometimes “follow” lottery winners.The themes of the articles always seem to revolve around the idea that it’s actually bad to hit the jackpot, as evidenced by the tales of woe recited by the principals profiled therein.The latest piece I’ve read on this subject was published recently in The Tampa Tribune, and the story can be found here: http://www2.tbo.com/content/2009/oct/01/winning-lotto-numbers-not-always-ticket-dreams-suc/#.In keeping with the aforementioned theme, the sentence that begins the article reads, “One person’s blessing is another person’s curse,” so we know where this article is predominantly headed. Playing the lottery is obviously a poor use of money, or what some consider a tax on those that are bad at math. That said, this particular article doesn’t dwell entirely on the negative, and mentions a few winners who, amazingly, weren’t cursed by their windfalls.How in the world could that be?

Simple.They, to paraphrase Rudyard Kipling, managed to keep their heads when all others seemed incapable of hanging on to their own.Because they were apparently stable, sensible people before they won the money, their windfall didn’t magically transform them into immoral, irresponsible nutjobs.Receiving a huge windfall does not change you; rather, it exposes who you really are.If you are a smart, sensible, humble person at the outset of your good luck, you will quite likely remain one…albeit a much wealthier one…after you hit the mother lode.Conversely, if you are irresponsible, immoral, careless, greedy, weak, or any combination thereof…your winnings will give you the opportunity to behave not merely like an idiot…but an idiot on steroids.

If you do happen to be one of the fortunate who comes into a windfall from any source, I can tell you, as an investment manager, that the most important first step you should take is to make an appointment with a fee-based financial planner, one who is compensated only by the fees you pay him for his advice, and not by any commissions or transaction costs that are generated by investments he can sell to you.There are numerous ways to find such planners, and one excellent resource is the National Association of Personal Financial Advisors (www.napfa.org).Make this appointment first…before you do anything of substance with your winnings.

How often have we heard those who misquote 1 Timothy 6:10 by saying, “Money is the root of all evil,” when the correct quote is, of course, “The love of money is the root of all evil?”It’s an important distinction.The fact is that money can be a wonderful resource by which to provide security and enjoyment to one’s family and church…or it can be an enabler of some of the worst, most destructive behaviors known to man.In the end, those who point to inanimate objects of any kind as the sources of their own failings are cowards who are unwilling to see themselves as they really are.